How Solar-Plus-Storage Can Re-Align Customer and Utility Values Presented by Brock Mosovsky and Cory Welch
Customer Perspective Mid-day solar gen has significant value Image Source: https://www.caiso.com/documents/flexibleresourceshelprenewables_fastfacts.pdf
Utility Perspective Mid-day solar gen presents significant risk Image Source: https://www.caiso.com/documents/flexibleresourceshelprenewables_fastfacts.pdf
How Can Residential Solar + Storage Systems Help? Shift Energy Provide dispatchable solar gen Open additional value streams BUT Residential customers will install storage systems only if there is value in doing so!
Questions Explored in this Talk What does optimal solar + storage system operation look like? How does the value of storage depend on: Differences between time-of-use rates? Demand charges? Export compensation rates? Under what conditions are residential solar + storage systems cost-effective?
4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 Load (kw) Solar PV Only Significant mid-day over-generation 3.5 3 Mon Tues Wed Thurs 2.5 2 1.5 1 0.5 0 Hour of Day Raw Cust Dmd Solar Gen Image Source: Navigant Analysis
4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 Load (kw) Solar PV Only Net load goes negative: export to grid 3.5 3 Mon Tues Wed Thurs 2.5 2 1.5 1 0.5 0 Hour of Day Raw Cust Dmd Solar Gen Net Cust Dmd Image Source: Navigant Analysis
4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 Load (kw) Solar PV + Storage Storage charges during over-generation 3.5 3 Mon Tues Wed Thurs 2.5 2 1.5 1 0.5 0 Hour of Day Raw Cust Dmd Solar Gen Storage Charge Image Source: Navigant Analysis
4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 4:00 8:00 12:00 16:00 2 Load (kw) Solar PV + Storage, Demand Charge Storage discharges to reduce peak demand 3.5 3 Mon Tues Wed Thurs 2.5 2 1.5 1 0.5 0 Hour of Day Raw Cust Dmd Solar Gen Storage Charge Net Cust Dmd Image Source: Navigant Analysis
Load (kw) Solar PV + Storage, Time-of-Use Rate 3.5 3 2.5 Storage reduces demand during the time-ofuse peak period On Peak 2 1.5 1 0.5 0-0.5 2:00 4:00 6:00 8:00 1 12:00 14:00 16:00 18:00 2 22:00 Hour of Day Raw Cust Dmd Solar Gen Storage Charge Net Cust Dmd Export to Grid Image Source: Navigant Analysis
Load (kw) Solar PV + Storage, Time-of-Use Rate 3.5 3 2.5 Peak demand is only marginally reduced, since there is no demand charge. On Peak 2 1.5 1 0.5 0-0.5 2:00 4:00 6:00 8:00 1 12:00 14:00 16:00 18:00 2 22:00 Hour of Day Raw Cust Dmd Solar Gen Storage Charge Net Cust Dmd Export to Grid Image Source: Navigant Analysis
What/Where is the Value? Valuation assumptions: Full system cost incurred: no incentives Revenue neutrality against raw customer load A customer with no solar or storage should have the same annual bill under each TOU and demand charge scenario. 5.5 kw solar system, 3.3 kw/7kwh battery 20 year lifetime, replace battery at year 10
Electricity Rate Scenarios Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 Avg. On-peak Illinois periods: weekdays residential only, 10 AM-8 retail PM in summer, rate 7 AM-11 in 2014 AM and was 5 PM-9 PM $0.119 in winter 2 Monthly demand charge assessed based on highest hourly demand in each month Source: EIA Form 861 Annual Electric Power Industry Report
Flat Rate, Net Metering Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Annual System Value ($) Flat Rate, Net Metering PV Only and PV+Storage have equal value $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
Flat Rate, Net Metering Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Flat Rate, 20% of Retail Export Comp Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Annual System Value ($) Flat Rate, Net Metering $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
Annual System Value ($) Flat Rate, 20% of Retail Export Comp Value falls for both systems, but much more so for PV Only $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
Flat Rate, 20% of Retail Export Comp Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Flat Rate, 20% of Retail Export Comp, $10/kW Demand Chg Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Annual System Value ($) Flat Rate, 20% of Retail Export Comp $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
Annual System Value ($) Flat Rate, 20% of Retail Export Comp, $10/kW Demand Chg PV+Storage value increases, PV Only value decreases $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
Flat Rate, 20% of Retail Export Comp, $10/kW Demand Chg Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Flat Rate, 20% of Retail Export Comp, $10/kW Demand Chg, 5x TOU Mult Base Electricity Rate ($/kwh) TOU Peak Rate Multipliers 1 (Peak / Off-Peak) Demand Charge 2 ($/kw-month) Export Comp. Rate (% of Retail) $0.10 1 $0 100% $0.20 1.25 $2 60% $0.40 2.5 $10 20% 5 $20 1 On-peak periods: weekdays only, 10 AM-8 PM in summer, 7 AM-11 AM and 5 PM-9 PM in winter 2 Monthly demand charge assessed based on highest hourly demand in each month
Annual System Value ($) Flat Rate, 20% of Retail Export Comp, $10/kW Demand Chg $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
Annual System Value ($) Flat Rate, 20% of Retail Export Comp, $10/kW Demand Chg, 5x TOU Mult Value increases for both systems, but more so for PV+Storage $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 Base Electricity Rate ($/kwh) PV Only PV+Storage
How do System Costs Affect Value for the Customer? Value varies with electricity rates, but costs do not Bill Ratio = Annual Bill With System Annual Bill Without System Bill Ratios less than one are cost-effective Bill with system includes loan payments and O&M Financing at 6% interest, $0 down payment
A Cost-Effective Scenario 2016 solar PV and battery storage costs $0.40/kWh energy rate (e.g., Hawaii) Export compensation at 20% of retail
Bill Ratio (Lower is More Cost Effective) A Cost-Effective Scenario 1.00 PV+Storage more cost effective than PV Only at high TOU peak rate multipliers 0.95 0.90 0.85 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.0 1.0 2.0 3.0 4.0 5.0 6.0 TOU Peak Rate Multiplier PV Only PV+Storage
Bill Ratio (Lower is More Cost Effective) A Cost-Effective Scenario 50% 2016 Battery Costs 1.00 At lower battery costs, economics improve considerably 0.95 0.90 0.85 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.0 1.0 2.0 3.0 4.0 5.0 6.0 TOU Peak Rate Multiplier PV Only PV+Storage
Conclusions Solar+storage can be more cost effective than solar alone, given the proper electricity rates. Rate structure components interact in a complex way to prescribe optimal solar+storage system operation. With an understanding of how rate components contribute to system value, utilities can design rates that shape solar+storage dispatch.
Acknowledgements Thanks to: All of you in the audience for participating AESP for hosting a wonderful event Navigant for financial support
Questions? 1 t-e S P ASSOCIATlON OF ENERGY SERVICES PROFESSIONALS